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Burn Multiple Calculator

Calculate burn multiple: net burn / net new ARR (a growth efficiency metric).

Burn multiple measures growth efficiency: how much net cash you burn to generate $1 of net new ARR. Lower is generally better, but benchmarks vary by stage.

Prefer an explanation- Read the guide.
Need definitions- Browse the glossary.
Burn multiple: definition, formula, and how to use itSaaS Magic Number: definition, formula, and how to use itUnit economics hub: CAC, LTV, payback, and runway (a practical stack)ARR waterfall: reconcile starting ARR to ending ARR (net new ARR)
 
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Used to estimate required net new ARR or max burn.
Tip: you can type commas (e.g., 10,000).

Example

Using the default inputs, the result is:
1.5x
Net burn (period)
$300,000
Net new ARR (same period)
$200,000
Target burn multiple (optional)
1.5

How to calculate

  1. Measure net burn for a period (often quarterly).
  2. Measure net new ARR for the same period.
  3. Compute burn multiple = net burn / net new ARR.

Formula

Burn multiple = Net burn / Net new ARR
  • Use the same time window for burn and net new ARR (often quarterly).
  • Net burn is net cash outflow (cash out - cash in) for the period.

FAQ

What is a good burn multiple-
Benchmarks vary widely by stage and go-to-market motion. Use trends and compare within your peer group. Pair burn multiple with retention and gross margin to judge growth quality.
Is burn multiple the same as the SaaS magic number-
No. Burn multiple uses cash burn and net new ARR. Magic number uses sales & marketing spend and revenue output with a lag. Both are efficiency heuristics with different inputs.

Common mistakes

  • Using inconsistent periods (net burn quarterly vs net new ARR monthly).
  • Ignoring annual prepay timing that can distort short windows.

How to interpret

Burn multiple tips
  • Measure quarterly to reduce noise from timing.
  • Pair with NRR/GRR to ensure growth is durable, not leaky.
  • Use payback period to connect efficiency to channel-level economics.

Related calculators

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CAC Calculator
Calculate Customer Acquisition Cost (CAC) from total acquisition spend and new customers.
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Fully-loaded CAC Calculator
Calculate fully-loaded CAC by including paid spend plus sales & marketing costs (salaries, tools, and other acquisition costs).
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LTV Calculator
Estimate customer Lifetime Value (LTV) using ARPA, gross margin, and churn rate.
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LTV Sensitivity Calculator
See how gross profit LTV changes as churn and gross margin vary (simple 3x3 sensitivity).
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LTV:CAC Calculator
Compute LTV:CAC ratio and CAC payback using ARPA, gross margin, churn, and CAC.
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CAC Payback Period Calculator
Estimate how many months it takes to recover CAC (months to recover CAC) using gross profit.

Quick checks

  • Keep time units consistent (monthly vs annual) across inputs and outputs.
  • Segment by cohort/channel/plan before trusting a blended average.
  • Use the related guide to avoid common definition and denominator mismatches.